Acorns Review: A Comprehensive Guide to Investing with Acorns
Investing can be a daunting task, especially for beginners who are just starting to explore their options. That's where Acorns comes in. Acorns is an investment app that allows users to invest spare change automatically. With over 10 million all-time users and $15 billion in assets under management, Acorns has become one of the most popular investment apps in the market.
In this article, we will deep dive into Acorns and explore everything you need to know about the platform. From its return rate and interest rate to how it compares to Robinhood, we will cover it all. We will also answer some common questions, such as whether Acorns is even worth using, whether it can be trusted, and what the pros and cons of the platform are.
Finally, we will walk you through the steps of setting up an account and getting yourself started with the Acorns app.
How does Acorns Work?
For only $3/month, Acorns helps you invest money by rounding up to the nearest dollar on all your purchases. For example, if you were to spend $52. 65 at the grocery store, Acorns would round up and invest 35 cents for you. Every time you make a purchase and round up that money is invested into an exchange-traded fund (ETF) that you select. ETFs are really just a bunch of stocks in one big bundle.
This is the core feature that drove Acorns' early success and separated them from their competition in the space. Since that original feature was built Acorns has expanded its feature set for those that want to take their investing to another level.
Now, you can invest more than just the amount rounded up. You can set up recurring investments, and a variety of other features we will walk through in the next section.
Acorns Features
Invest: This is the main feature of Acorns. It allows you to invest your money into a diversified portfolio of exchange-traded funds (ETFs) based on your chosen investment strategy. I like to call this the "Round-up" feature.
Recurring Investments: This feature allows you to set up automatic investments on a daily, weekly, or monthly basis. For those that want to use Acorns and their primary investment vehicle this feature is geared toward you!
Acorns Earn: This feature offers cash back when you shop with Acorns' partners, which is automatically invested into your account. You can check out the list of partners here and read the fine print here.
Acorns Later: This is a retirement account that allows you to invest in a traditional or Roth IRA to save for retirement. If you get started investing a little later in life, or if you have been with Acorns for a while and want to, again, take your investing to another level, Acorns has added this feature for you!
Acorns Banking: This feature includes a checking account, a debit card, and other financial management tools. It also allows you to earn cash back when you spend with Acorns' partners. It also allows you to "Get Paid Early" if you have direct deposit. Similar to Chime if you have direct deposit set up, you can spend a part of that direct deposit before it posts to your account.
Grow Magazine aka Learn: This is Acorns' financial education and lifestyle publication. It includes articles and resources on personal finance, investing, and more. This is a great Rolodex/resource to learn about nearly any financial topic, very similar to SmartAsset.
Acorns Early: This is a custodial account for kids that allows parents or guardians to invest on their behalf. Check this feature out here, if you want to start savings for your kids future.
Acorns Return Rate
First and foremost, the return rate of any retirement account depends entirely on the performance of the stock market and which positions you have taken within it. While Acorns may have a history of positive performance, that does not mean the same results will continue.
One of the most important things to consider when investing with Acorns is the return rate. Acorns give you the ability to invest in exchange-traded funds (ETFs) that are diversified across 7,000 stocks and bonds. The return rate of your investment will depend on the performance of these ETFs.
Acorns Account Reviews
When it comes to investing, it's important to choose a platform that you can trust. Acorns has received mixed reviews from users, with some praising the platform for its ease of use and others criticizing it for its fees and investment options.
According to NerdWallet's Acorns review, the platform has a 4.6/5 rating (that's pretty good). Some users praise the platform for its easy-to-use interface and automatic savings features, while others criticize it for its fees and lack of investment options.
Overall, I'd say Acorns is a great and easy-to-use app for anyone looking to get their investment portfolio started and those who have a little trouble setting money aside to invest. The amount of money you invest with Acorns is relatively small, you are just rounding up purchases to the nearest dollar, so many won't really notice they are investing at all.
Acorn App Review
Acorns also offers a mobile app that allows you to manage your investments on the go. The app is available for both iOS and Android devices and has a 4.7/5 rating on the App Store and a 4.3/5 rating on Google Play.
The app is fully featured for those of you on the go! You can set up your account, and take advantage of all the features you find online on your cell phone.
Is Acorns Actually Worth Using?
The answer to this question will depend on your individual investment goals and preferences. Acorns can be a great option for beginners who want to start investing but don't have a lot of money to spare. With its automatic savings features and low minimum investment requirement, Acorns can help you build a diversified portfolio without a lot of effort.
However, if you're an experienced investor or want more control over your investments, you may find Acorns to be too limited. Acorns only offers a limited number of ETFs to invest in, so you won't have as much control over your investment strategy as you would with other platforms.
Can Acorns be Trusted?
Acorns is a legitimate and regulated investment platform. The company is a member of the Securities Investor Protection Corporation (SIPC), which means that your investments are insured up to $500,000 in case the company goes bankrupt. Acorns also uses bank-level encryption to protect your personal and financial information.
However, like any investment platform, there is always a risk of losing money. It's important to understand the risks involved and to invest only what you can afford to lose.
Pros and Cons of Acorns
Here are some of the pros and cons of investing with Acorns:
Pros
Automatic savings features make it easy to invest spare change
Low minimum investment requirement
Diversified portfolio of ETFs
Offers cash back at select retailers
High-yield savings account with a higher than average interest rate
Cons
Limited number of investment options
Fees can be higher than other investment platforms
No tax-loss harvesting for taxable accounts
Limited customer support options
Is Robinhood or Acorns Better?
Robinhood and Acorns are both popular investment apps, but they have some key differences. While Acorns focuses on automated investing and spare change savings, Robinhood offers commission-free trading and a wider range of investment options.
If you're looking for a platform that offers more control over your investments and a wider range of options, Robinhood may be a better option. However, if you're a beginner looking for an easy way to start investing with spare change, Acorns may be a better fit.
How are Robinhood and Acorns Different and the Same?
Here are some key differences and similarities between Robinhood and Acorns:
Differences
Robinhood offers commission-free trading, while Acorns charges a monthly fee
Robinhood offers a wider range of investment options, while Acorns has a limited number of ETFs
Robinhood does not offer automatic savings features, while Acorns does
Robinhood does not offer a high-yield savings account, while Acorns does
Similarities
Both platforms offer mobile apps for iOS and Android devices
Both platforms are regulated and insured by the SIPC
Both platforms offer investment options for beginners
What are some Similar Tools to Acorns?
If you're looking for similar investment tools to Acorns, here are a few options to consider:
Stash: Like Acorns, Stash allows you to invest spare change automatically. It also offers a wider range of investment options and educational resources for beginners.
Betterment: Betterment offers automated investing and a wider range of investment options. It also offers tax-loss harvesting for taxable accounts.
Wealthfront: Wealthfront offers automated investing, a wider range of investment options, and tax-loss harvesting for taxable accounts. It also offers a high-yield cash account with a higher-than-average interest rate.
Step-by-step guide to set up an Acorns account
If you have made it this far, then you are probably interested in learning how to get your Acorns account started. Follow these steps and you'll have your account set up in under 5 minutes:
Download the Acorns app from the App Store or Google Play Store.
Open the app and tap "Get Started".
Enter your email address and create a password for your account.
Choose your investment goals, such as saving for retirement or a down payment on a home.
Enter your personal information, including your name, date of birth, and Social Security number.
Connect your bank account to Acorns to start investing. You can do this by linking your bank account or debit card.
Choose your investment portfolio. Acorns offers five portfolio options ranging from conservative to aggressive.
Set up recurring investments to automatically invest money into your Acorns account on a regular basis.
Verify your account by confirming your email address and linking your bank account.
Start investing! Acorns will automatically invest your money into a diversified portfolio of ETFs based on your chosen investment strategy.
That's it! Setting up an Acorns account is quick and easy, and you can start investing in just a few minutes. Remember to regularly review your investment portfolio and adjust your strategy as needed to ensure your investments align with your financial goals.
Summary
Acorns can be a great option for beginners who want to start investing with spare change. While the platform has its limitations and fees, it offers an easy way to build a diversified portfolio and earn cash back on select purchases. However, if you're an experienced investor or want more control over your investments, you may find other platforms to be a better fit.